SBNY - Earnings call transcript Q3 2020

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Operator

Welcome to Signature Bank's 2020 Third Quarter Results Conference Call. Hosting the call today from Signature Bank are Joseph J. DePaolo, President and Chief Executive Officer; and Eric R. Howell, Senior Executive Vice President, Corporate and Business development. Today's call is being recorded. Instructions]. [Operator my the now Joseph over to J. pleasure is floor turn to It Chief Officer. President Executive DePaolo, and

You may begin.

Joseph DePaolo

XXXX Conference Stephanie. you today Bank for you, joining Quarter Thank Good us for morning, the Call. and thank Third Results Signature

Before the ahead, disclaimer. read Lewis forward-looking my I Please formal begin Susan will remarks, Susan. go

Susan Lewis

are and of This Private to within from the subject of statements the time XXXX contain to Thank you, oral representatives statements Joe. time Litigation forward-looking Act Reform Securities that conference call uncertainties. and made by our risks meaning

should place they and predict operations. which risks relating You not those of undue statements to our are and may reliance because be to And on all difficult numerous business beyond environment, subject our to are uncertainties control.

results, environment, new interest on of and the our future the Forward-looking new the interest team rates loan overall. foregoing and pandemic and deposit operations, performance, statements openings, rate include private loan client office impact COVID-XX growth, hires, the concerning strategy and business of information business each on our

you should factors in in guarantees reports statements, further materially and quarterly results those these differ carefully that They statements. results. forward-looking with could filed that you described FDIC, risks, assumptions for involve information. to understand forward-looking performance should or the not cause review of from are include actual annual statements those you the These As consider our uncertainties and which

Bank speak made. of keep should as forward-looking in statements You only mind Signature that date by they on made the which were any

Joe. like to back turn I'd the to Now call

Joseph DePaolo

and end remarks. recovery will from will COVID-XX our Eric some protracted Corporate President at Senior questions financial and Susan. Bank quarterly Eric will to of pandemic. the country's during and and review Howell, continues results detail. your address performance extraordinary bank's of provide you, in growth experience the Vice into the I greater Thank challenging our Business development, overview the Signature I Executive then the

directors Recession, the be client-centric come. important not continues form, particularly was single-point-of-contact distress. knew were experienced through including to model, challenges times better know to more of been philosophy led group We've diversified. or Great to us, in and by it we did when but times, of in what Our a We business expected distinguish challenging many

billion, again expected, another increased quarter our with remarkably deposit these during times. quarter. all which are we us driven well established robust of $XX growth the loan $X.X results As new solid bank's the with pretax, was million Also, pre-provision grew to earnings Deposit initiatives. performance initiatives, growth, coupled will to our by up teams, in our and which gathering and the deliver $X performing by Xrd billion and was continue XX% enable of XXXX the strong had quarter compared or by unsettling

deferral billion loans X% loans. of from dramatically in were XX% $X.X total Additionally, to loans reduce or total peak to $XX.X of we of able a billion or

million of or business So initiatives, XXXX $XXX.X take the made predominantly for increase excuse asset growth of earnings. now substantial of XX% third Pretax, compared were by to was third quarter, me. we million billion, $XX XXXX investments pre-provision per was $XXX.X $XX.X with XXXX decrease offset million let's a the at by $XXX.X including -- quarter. million our the with $XXX.X quarter The in which the income look third $XX.X $X.XX year's driven earnings The credit for West losses third diluted attributable income COVID-XX. predominantly compared or net by driven third was quarter share for XXXX share provisions earnings Coast expansion. million quarter was in earnings or Net to per for last million a $X.XX diluted

deposit billion $X.X Since was now quarter this billion of with deposit and reported, quarter, following performance. ever loan $X the to of average our record total last fifth in core third the growth. of deposit deposits, philosophy. increased grew is Noninterest-bearing earnings at both last $XX.X this by or quarter's of total we deposits Moreover, $X.X over total by of billion. This while growth deposits. the billion coupled $XX.X the Deposits best second or deposits Looking and exceeding a quarter XX%. retention, growth, billion quarter, year, assets $XX.X consecutive average increased high still XX% billion represent X.X%

look $X a businesses. lending billion. billion third increased at take XXXX our quarter let's to the Loans $XX.X during Now

the billion. facilities. loans of continue primarily excluding This XX For Nonaccrual driven increase to XX was or core basis loans growth, banking where more months, this consecutive capital new the eighth C&I portfolio. the are to prior balance diversify assets call CRE transformation is $X.X basis floating loans $XX or we outpaced second million quarter. quarter in our compared include The PPP, points rate with points or million the second sheet $XX the rapid -- XX again loans XXXX grew by for as quarter fund furthering

processing $XX.X loans delays important XX- past documentation It XX- to this were for circumstances to were Adjusting note, Our well now COVID-XX the normal due XX-day current. to of caused are to XX-day the million. given dues dues million past by and decreased $XX million. XX- is $XXX.X within range XX-day to of past and

XXX%, allowance second compared This $XX to losses for losses for basis third million. stands low quarter. $X.X the were points the $XX.X for million ratio or million Our charge-offs quarter coverage for provision And XXXX Xx. with with quarter. remained at past XXXX Net X XX-day X.XX%. a plus credit quarter XXXX the million the third bank's brought million was for The the compared second due credit loans XXXX healthy $XX.X nearly at $XX.X

attributable in earlier, mentioned I provision the to was COVID-XX. As the predominantly increase

$XX.X deferrals. billion. peaked to at loan Loan Turning deferrals

book. October XX, X% of or As deferrals in had $X.X we billion of loan

strong We charge-offs the So increased have and quarters the But dramatic where fully adoption we've losses, for loans COVID. on given earnings what may have we front. anticipate added for we effect coming come. we made power the covered due since are million adequately that our this a our nonaccrual loan improvement in CECL, of the will to and $XXX of allowance level of

XX the front. in New he the the has Angeles San XXXX the three In private banking on teams and team call teams: total a with to client bank over financial Now quarter's banking Coast. results bank team Marketplace. review greater I'll Francisco now the private Los office, of York client Greater turn and the third Together quarter, the on two point, our the this to in West in one Eric, detail. At onboarded will

Eric Howell

income Net reviewing quarter increase Thank with penalty to X was XX% primarily you, XXXX for Joe, and prepayment million, $XX items: million interest the significant was cash First, net margin and compression; XXXX $X.X Net affected interest X second, quarter impacted was income million or deposit compared compared for X.XX% points. margin million, second $XXX good the XXXX I'll quarter. of $X.X basis flows by and X.XX% third this start margin up of the the quarter, second causing by third basis interest by from net down for the The margin when income quarter excess margin. interest points everyone. the quarter. reached XX morning, for from an

basis from was X.XX%. driven in The funding quarter asset our rates and costs XX XX at for points in lower yields ago and decreased from all the classes. year a decrease overall asset a to Now by let's asset basis look points moment. reinvestment yields of Interest-earning yields linked asset

low reinvestment, Additionally, for to X.XX%, average given securities compressed much Yields the market decreased affect The a at lower spreads points excess linked yields. loans to and elevated years, PPP XX speeds. cash market continue pressures. X.X given on and CPR remained significantly duration basis portfolio portfolio quarter

our quarter. commercial with X.XX% declined average Turning XXXX second loan loans XX commercial portfolio. points mortgages basis to to the Yields on compared and

second from in decreased the quarters, level in of quarter down activity. quarter looking compared liabilities. Prepayment penalties to XX market And million prepayment penalties to were both the $X.X prepayment yields as the decline Excluding at led lower transactions points. now $X.X XXXX the the third million, basis for XXXX

rate XX we decreased environment. meaningfully continue points this due Our deposit overall X to cost interest that anticipate by We XX reduce basis basis quarters. will coming in deposit the points quarter from costs low our to to

our $X the And in prior to X.XX%. entire the penalty prepayment of X.X% lower million. The cost quarter, The borrowings paydown of to a $XXX.X private Coast, of The billion now points teams the the teams XXXX for we and with Noninterest funds million sheet. decreased and points. million the Noninterest XX compared primarily was an During a the X $X to growth of third client was due million, borrowings, $XXX.X in service average from for of quarter resulted the banking gains increase due $X.X million quarter was significant year. hiring of The increase overall, And to to to of income XX.X% turn in the where hired versus decreased which basis billion sales noninterest $XX $XX.X period quarter increases loans. on due for or expense and expense. or year was we'll million ago. basis cost XX third the linked charges, or decrease to basis X quarter. securities same $X.X of due for when thus to XX.X% borrowing fees was third XXXX balance and the points The increased the the on income cost West was XXXX increase expense quarter have far borrowings.

Additionally, prepayment fees that penalty we prepay. incurred million borrowings we on the in billion $X.X in $X

third regulatory low third despite expense the bank's been quarter third in XX.X% margin for as back same Thank augment period drag X, and $X.XX And dividend I'll ratio as for X minor debt, XXXX ago. of of the per compared in paid The remained penalty of second capital. for at Coast cash, share. of X.XX% with the on versus XXXX, X bank dividend quarter. And had the quarter ratio Tier from the would call quarter a a which the capital, XXXX, as now and the public which XX.X% West XXXX $XXX remained excess October requirements XX.X% ratio million you. sheet, And And qualifies profile Excluding in of a XXXX the and bank fees, subordinated the turning balance the all the on the efficiency total quarter. a year well significant the hiring risk-based third the the Joe. XX% to XX.XX% turn cash a XXXX of low-risk for to the Tier have leverage when increase the and offering of by completed on of relatively excess capital and effect evidenced ratios,

Joseph DePaolo

XX. reflects of colleagues have months of we provisioning; the $XX Times like pandemic. needs reduce of deposit performance $XX Coast pre-provision including this of of as or clients to growth of provide to growth ROE deferral or strength level the XX% to and clients their loans our my value robust many during bank's lastly, core I'd part one, strong Eric. $X.X XXXX: efforts XX their of their a our my the been billion teams the four, million $X.X of X% year; year-to-date six, billion; these, demonstrated continue to or West number we've extraordinary advice far, grew in dedication the five, who expansion; our of as October loans have our execute Thanks, by dramatically of we in high franchise a like Thus the billion from to amount billion; teams, X XX% pretax, in XX% care spite on colleagues had and our three, and that able we thank of unbelievable total as delivered heavy earnings fronts. and $XX.X we truly two, of loan in added first XX

in deploying the we the the XX XX and to fourth rates, basis decrease low year. continuing in points basis quarter, and points end be cash deposit securities the the During we're by we're interest loans, or of high excess should

we Now I'll questions any you. it are happy turn back Stephanie, to you might have. to answer

Operator

Instructions]. [Operator

comes with Fitzgibbon Piper from question first Our Sandler. Mark

Mark Fitzgibbon

could $X the the wondering East could share West what deposit us you sort West? the of of total of Coast, I us loan with Coast and also, And with that was out you of that? mix between the had deposits billion and this what quarter was if if balances share you split

Joseph DePaolo

capital grew more X quite were had teams where been million; than these Well, and a had Coast, we York, down that somewhat. team I the digital for We nearly, nearly mortgage teams million. could $XXX over the $XX grew And million. X deposits was venture you $XXX that than million; We servicing more in $X nearly are the had Nine tell teams billion. million; West $XXX grew million. teams New X more about banking, the $XXX have teams, the The $XXX of X, the specialized bit. fund around of broken

So it's really across the board.

Mark Fitzgibbon

secondly, Fair in a enough. many that out you From West. the curious, few of next I And the practical in I you've teams do bring I'm know a year? fourth mentioned all you those have of then maybe you mostly think how and on standpoint, guess, pipeline, quarter could quite

Joseph DePaolo

It's bring we're in unlikely the XXXX. actually the when for of get their bonuses. we'll now teams any timing because fourth on of quarter planning But when right they'll

So teams terms many on, bring teams how it's say be numbers. wide to but range of can hard a could we it in of

Mark Fitzgibbon

XQ? margin if wondered you help Okay. your us could in then interest for And think about outlook net the I

Joseph DePaolo

I the lengthy want Eric question. take

Eric Howell

mean, to drive the loan at feel we're comfortable going at end significantly income We came interest growth net of point, that. Mark. that We unbelievably of Yes. had quarter. a this pretty Thanks, I the quarter. predict, is Appreciate on higher this third to impossible lot NIM that Joe. the

most growth quarter. at came fact, loan the our third In the of end of on

into flow the will nicely in that quarter. So fourth

already some be will fourth which in have quarter, loan beneficial. nice We growth the

be We potential the coming in portfolio, selective are there. in a are and for rates although the spike that to elections the investing securities continue we up given

So the But right after we're little on we're to of a now. being putting lot selective cash a the elections portfolio. use securities until

very up. we about So NII feel comfortable driving

quarter. very NIM, we robust to short flows. know DDA But it's we predict deposits coming had normal because hard continue deposit As into to growth continues we've And have will this order. it significant relates deposit in that some leave the to in the really already

put even we So to use. feel more to good But growth. we've got about very cash NII

Mark Fitzgibbon

next last anticipate capital see, quarters? And on do question, over, several Great. equity growth you based the the to that Okay. raise then needing you say,

Joseph DePaolo

billion power We of annually. Eric mentioned, we've a grow that substantial. with know. the plus We as although growth has billion God $X our the sheet quarter, months first more X could expect normalized the fourth been provision, don't earnings year, billion the earnings our balance $X to had pretty $XX this

$X So $X to flood that billion. could earnings deposits we continue. with the go don't will power, of billion our we We that have anticipate

We doing Our don't equity capital capital to plan going accretive be earnings raise are We're growth. on anytime the soon all. to comfortable with any ratios. at

Operator

Point. comes from question next Your Compass David Rochester with

David Rochester

just the It as you're was continue great. updated credit buckets there about if And to you've update those an on add move good deferrals on any the to of work a give to metrics have thinking if buckets, nice lower, the were in and time any would loss given see to wondering could release how well. content had I was more point for these then those with those trends that you collections guys? be at you this

Eric Howell

for to clients, our broadly, continuing talking find right? Sure, they mean, trying us, solutions We're the challenges are that in have. David. with work to them to to I very they meet

Our run businesses. generate of to to their to want equipment on properties. They want They their their run to properties. been own conversations to their They positive. want pieces hold revenues. want They that have

able level And have up. can fight loans, through our So comfortable earnings through. out significant we provisions a this power and environment. But of given not we ourselves. more reserved about, that a content for We do see we Joe And it there loss we're fight quite we our losses, we come, our be be to that we at talked and all be easily than non-accruals to significant, of will earnings we'll will go between but not right? that that, that feel will feel are let's -- what's is as adequately power, feel hit coming these

clients the many able -- feel been that are getting their So positive they good been the same as coming for months range. collections seen but with there. see, they've have collections, before, in trends broadly up. we've we The tenants to continue ranges most collections to say, at into work in We higher I'd the range of the the on our this, that end still are now in

So that to continues positively. trend

Joseph DePaolo

utilizing if clients keep let us the goal I CARES that's may they're the taking to hopefully, CARES main issue the We're is will actions businesses. And the timing them keep Act, clients of the in goal more appropriate survive. That And Act. and add, the their goal. That to vaccine in and of the that businesses was in. stimulus of

David Rochester

a the how of to just was I like you continuing those, in you did more to just Great. to got flexibility can more those borrowings if And your then away where and wondering deposit growth retire come shipping appreciated -- you've go All this deposit to the right. I have keep can the of how color costs near-term soon. quarter? given switching lot just NIM. you much on

Eric Howell

We'll about at in sitting we'll to amount million a to makes likely we're range it the us those to see borrowings looking of sense that's similar probably We're us on. amount if what Yes. give cash prepay million most continue prepayment to do and in $XXX saw to now $X will we for that. million expense. $X cost quarter, this It that

Joseph DePaolo

could pretty the financing a quarter. there. is banking. see Signature usually fund a long The particularly quarter $X fourth best fourth deposit Financial, well best over I'm substantial pipeline, their leasing, usually have in quarter substantial quarter, in sorry, pretty their and equipment billion -- so We growth we is

up we'll So we the over the once be securities curve a of is sense the significant. buying the step be. pipeline get yield where and And we'll -- election pretty of is will buying

David Rochester

seeing you're point. Xs they're that the I still was low in for yields at they what buying? Yes. could where change just you're if like range Yes. today No, those definitely curious

Eric Howell

the in They're low Xs. Correct.

David Rochester

quarter expense securities quarter? trying was I last premium was this versus to amortization what what then the impact figure out was just there. And

Eric Howell

pretty was quarter. was to $X.X up prior It up compared It significantly. this the quarter million

David Rochester

maybe new switching loan to Okay. then just yields. And

think estate, I just for which call mid-Xs lines an the capital you real on would you were commercial multifamily if on refinancing update sort at we get guys that be previously. great. And of then are there, and

Joseph DePaolo

about sticking year the we've call That's with. mid-Xs. what Multifamily, And five loans been fix the is capital X.X.

primarily some So Xs, low mid-Xs. but

Operator

Matthew Your is Breese from with question Stephens next Inc.

Matthew Breese

a normalized a mentioned more getting or to normalized You provision.

reserved. also you're that like pretty mentioned You feel you adequately

could mind, perhaps or bit next With you provide over these provision, cadence of the few a outlook little range? just talk the the in a comments provision quarters about

Eric Howell

It's modeling $XX really Matt, to hard we're to to to go. predict with it's going going days, back where CECL to think million. truly it's provision million $X these I where normalized get level don't a

So the to next there has Moody's over while. quarters, out what predict. have be come will elevated it a the for few from that's little with to see and probably for we But model us difficult

Matthew Breese

the over then beyond been And about us Okay. growth any total thought year a thinking year has of last just ago. way asset what

about you what that by? provide some good is As Or think outlook a grow billion, $X months, you billion of the the range you could is to to sheet balance that next expect XX $X there?

Joseph DePaolo

so Well, billion. quarter. in we're almost X billion trying afraid tell thus growth the I'm been It's to robust. $XX the had $X far much stay billion to you been fourth how the to in $X has with far months. We

some dollar substantial, off balance some initiatives the in, few see clients don't them them the from tell of XXXX. happening over leaving half pretty All class due and is sheet. will a certain but go at Although that be are of a of where weeks. escrow of period them that they're that actions growth a we We there's we'll cap the to accounts level we in kicking

Eric Howell

back mean, yield sheets balance that. the have the sheet has bring we could question. banks. off-balance certainly to from alternative moving face where that investments been mix. and into I And from let's Everybody curve goes it. We've on to see of been benefiting No the

move happen rise, where we off-balance the certainly see if the could sheet deposits So to will rates see investments. opposite we

Matthew Breese

is much of Could months? you you over line next NIM? liquidity basis top recoverable the And XX of how point drag that kind sheet balance some back sense to might X on the just give for the us the hold

Joseph DePaolo

under large. billion. Well, going And we've liquidity going we'll gotten circumstances below to probably as about keep normal $X that see I us at don't

Matthew Breese

$X the XX can get So is say, quarter, to right you points can basis million next quarter this had the in go to you $X that that back? and majority billion cash of

Joseph DePaolo

hope, Actually it. doubt would but that's we we what

-- strong. We loan very the have is although pipeline

already Treasurer investments, Our is XX of We don't let election. but because hours. buy to tied off holding he's him the for seat to somewhat his out

Eric Howell

Yes. deploy of take it quarters realistically, amount will Matt. that cash, us But to several

Joseph DePaolo

this only we're an quarter, we're Matt, $X the to you billion. into up give XXth idea, day. And

in billion leave $X.X to DDA. rather quickly, Now of it's going is that

more So let's deploy. That's billion. have in we billion $X.X $X.X call that it cash to

quarters. is take it So going to several us

Operator

is Haire from with next question Jefferies. Your Casey

Casey Haire

Okay.

timing So charge-offs well a strategy the question as on XXXX. into deferral the of as

might you you With you so the X% that the how allow talk of there? deferrals now, take that? you how impact to just those into -- the us and through CARES guys right choose. are Act And about you trajectory charge-offs Can thinking does XXXX, if

Joseph DePaolo

paying a X come and identified the and then and go a XX are -- come to they deferrals. the and come that on the end that off they months first -- loans, there's of few deferrals no, that would of deferrals. then between off just there's now One, or deferrals be the the start the now on start we've the all, off they P&I. options. months deferrals deferrals only. interest-only of then Well, on year, interest just for stay -- They paying ones They they of part loans We're the series for

have have and that try sense could the they try and loan to negotiate case If off will we and there -- principal loan. the comes I is there's of it few start not that's a tell loan, the from that was it you to the different sell interest. paying interest-only, to a do that piece can off collectible a after collection it that thing So of do. we a options will But one deferral is

under opening optimistic, June. idea of up anywhere believe until for X,XXX. seats That's that in flow the cash after the those do that first quarter good CARES it, will number for weekend that Memorial whether we loans to the fourth make not it. incredibly loan we has make We will Labor will the than then York Day. that keep it they have take sit Act still example what in If good to goal the we the immediately is And in can't is is to more still the seats. they because back New in. not actions really know X,XXX sign state, after A people they tell to likely clients if they be don't you to would They is in contract Beacon X XX then X,XXX, Day the Theatre their an X,XXX Broadway said of not extend A Broadway. could from haven't given months, longer. or allow example will can't XX The a to businesses. you

them So they're example time. a The But that's were we ours, if long have an -- client. client period Theatre give of to of not a of would this. a Beacon they

where the to So in XXXX. the businesses. very will the with we today key think we I portfolio from our comfortable will to the aspect fourth of is again, probably feel be have. quarter. the that for quarter charge-offs we fourth clients are There in be keep the allowance But first quarter the charge-offs There that provisioning their and our goal is

Eric Howell

our high as having well, of a charge-offs the we just level Given with point. clients we're that don't this meaningful at discussions all see

Casey Haire

retail Okay. transactions And your the it's And where tough is a But into debt baking in where -- in build, put confidence of rates? underwriting, of visibility front, you your conservative guys is lack that then kind given is office, presumably, it I collection out should And on guys to ratio price given the know what these are that. Where release, today. on you service under the where the lot service XX%. those reserve have debt multifamily, coverage forecast? of you today, the are LTVs coverage into the at degradation some see

Eric Howell

I'd and multifamily, But the north all dependent over now, say coverage board. that of service it's the a really right? little on property Xx it's

As as for it But we get under office. probably a well the into and it's Xx. same range there slipped broad again, retail,

Joseph DePaolo

The operators of want dollar have they the the not that. I'm rescue have of properties where saying some to off. the properties, But and because fill that be to on ultimately are multi-million that charged certainly families, the stepping we're properties, seeing to any to they keep the going decent the flow, up multigenerational, there's they're they properties cash differential

fairly through pandemic. negotiate make can allow we as will and long that a a As an -- they period negotiate they them get fairly get time of for interest-only to this

Operator

Morgan is Stanley. Your next question Zerbe with Ken from

Kenneth Zerbe

Just big did of yields, obviously, in terms loan we see a really drop.

lower they sort loan to should acceleration fell trying side. you head of around prepays capital I'm really wasn't due as I just I as on lot said multifamily or think to yields there it we that expect? all get did? there is a is of to know my something was that why continue And on the calls much much Or down coming XX yields? basis Is at points sequentially. the --

Eric Howell

on some come I interest rate we're of Yes. mean, given at seeing yields, -- lower it's the credits environment. certainly right,

We So for for the billion also $X have the PPP in right? for a was $X.X it on there was average, quarter. second quarter, it quarter, third full billion

today. in the come So X yields all at of basis our seeing of asset compression lower we that was points as are well. classes generally, But about

Joseph DePaolo

floating have happening loans. a capital have to that And add, sheet the rate loans, couple with to capital a call ago of balance what's years made the that's us rate. it floating a And with I facilities. was we we just want important the transform decision to call needed generation for of to

in reserve it such thing call we if the reserve would facilities didn't X.XX? the what, that is is Another count be that the capital

Eric Howell

Yes.

Joseph DePaolo

X.XX be opposed would significant pretty that's loans. because rated to as and they're X.XX. stable It And fairly highly credit fairly

sheet to than So XX fully era loans the points. ago. fixed rate sheet little something we're in neutral But balance that's does whole balance to basis LIBOR loans with of bit our bit the we were more a a rate dominating it where years little sacrificing being have transform several

Kenneth Zerbe

deferral, in Got of with it. still then on to of are actually Understood. for loans round many a six that versus how asking And the start basically terms second deferral? month X% those deferrals were

Eric Howell

deferrals. XX all days second They're around

Kenneth Zerbe

it. Got

I Okay. And just question. then guess last

In is come being you this that in that anything did, repayment terms of guys benefit of that's fourth much how may versus quarter yet? the the not quarter recognized debt in

Eric Howell

say $X at it's guessing be about $X.X it's No, to want million no, about I per that month, I'd number. quarter. per actually. a million

it's per months. quarter X back $X paid to about will million X So be in

Operator

Your of Ebrahim from Bank America. question next Poonawala with is

Ebrahim Poonawala

all of the I I unless it on XQ of CRE in this would wrong challenge provisions on below loan when point, macro from don't it's or follow-up added we that because the is the book? something terms about CECL based we understand mean deferrals levels issue expect you've drastically you be in it on book, perspective, the overall in credit. is if provisioning. analysis growth at assume is the safe a to look to Like forecasting But Just of goes think think -- done the forward is, NII right? the to stock I where here. credit, your

Eric Howell

That seems reasonable.

Ebrahim Poonawala

what need book I'm confidence extended this mentioned, deferred good of extra additional which sense is the Broadway Got expectation? goes deferral when you that of on book the December, have this like think your of around we XX-month And around of time. that help? some the What borrowers, about it. the percentage that of knowing maybe paying? actually the just level $X.X a the your Joe percentage this versus billion, What's back needs it's expectation into to customers update may assuming Jan. that next comes And it's maybe book,

Eric Howell

still position to have mean credit. it's where they're then will only. P&I Yes. will I a And the then to further that. will X smaller back us go though, we're paying. there go percentage we'll a And Certainly, vast early the a deferral back do will to a when interest that little paying think the months that and that, predict need be enhancements amount majority get paying looking will to to only. to majority something. get to We we Ultimately, we think that interest go

Joseph DePaolo

trying he get account interest, I Eric when enhancement. something longer-term months a need they be. put cash, something back we should them to get we're to personal to very of time for Because key for get XX the guarantee a mean, months XX of period there said situations, that into credit where longer to of said giving of

Ebrahim Poonawala

driven on are Got perspective New right? just York what X, is lot City How X, Joe. X question New of City like economy, you of last to it. will look about And people's or that, just York XX worried out. one the A this months months

expectation the owners, sense is your look into months York New your X, City next talking year? what we as out business X Given of where will landlords, to economy be

Joseph DePaolo

Well, New not only is our resilient. York the resilient, City incredibly area and portfolio metropolitan is

more top the the than the the It's population world. and the but economy Broadway. it they're area you the Chicago, they not Los Broadway. countries bigger XX% placed, a Angeles, -- be take there all take it'd is If are being that London, in of country, than of area,

Broadway, see to you want to come New You York.

You come York. want New you see to to museums,

You temporarily they Cathedral, mean, York. up were that want to out I City. found compares Patrick's The have moved given here. see many have St. they very you but their nice, owned to apartments. they that If haven't the to things New nothing York away. Maybe New to there's an suburbs It's fact resilient. that there's come Central so just Park, people apartment,

on very very Democrats the the January there's timing believe a government it's city, Republicans going -- vaccine, portfolio. run we're of or whether or Whether we're on We're a do XXXX, January We issue. there's New it's be going City. XXXX to our to stimulus. bullish be So the bullish bullish a the of very, and very really York on

Operator

question next Steven with JPMorgan. Your Alexopoulos from is

Steven Alexopoulos

in increased regarding first, expect the and that commentary you Which net So do charge-offs? see quarters. near-term nonaccruals see driving to charge-offs portfolio coming you

Eric Howell

in on open focused really the particular, is we Yes. It's destination need up. of we're the to Manhattan, retail. really the where I'd City, retail say the mostly New York that area

of about Steve. the closed million we've I'd destination that's say circled that be areas those eye focal keeping So we've $XXX in point, got we're would Manhattan on that that a

Steven Alexopoulos

the said more you a or do for existing then But helpful. reserve That's do add you can felt credit the challenge And both covered actually pretax adequately Okay. reserve from mean times couple standpoint from an pre-provision, of standpoint? mean ahead. you a that you you to

Eric Howell

provisions, ROE power amount I mean comfort of banks not of earnings. that mean, have really. generated earnings both, that But reserved. we our of XX% $XX level interest providing We from we many income, net There's it obviously the this to fact an existing, talked up we level feel million while in adequately that higher expect we We had us have. a significantly what And about that go gives is we significant right? quarter. a

lot a So unforeseen to front us, got any us the earnings challenges power have and challenges. should of allow of let's coming that ahead, of any say, in of the, we that we've overcome

Joseph DePaolo

liability work can -- and side. part A that have the confidence talked about low-XXs, down we at And cash low-Xs, today bring is we high-XXs. gives to are as we they deploy. of then large us both all the we liability the what from can We XX% can asset costs both have Eric where a

confident increase So on shouldn't fairly confident, -- fairly quarter. will we're say we're the very in that happen I the fourth

Steven Alexopoulos

the commercial $XX then, remaining that most exposure. mean, biggest York comfortable outside they're I to, NIM billion investors It's And New clearly, some And is pressure estate real quarter, helpful. That's Okay. the pretty talked this on are maybe with stock I multifamily. concerned the City investors with. the of the overhang

$XX most have losses? do You done see what you testing as you segments that And billion? risk about in what guys of talk seeing stress

Eric Howell

retail, the we it retail. that's what the we've is Soho, the on from I good I retail really neighborhood mean now. focused what's destination Times mean about what retail we're it. right Square, in talked portfolio, mostly It's about the seen

in that back boroughs As really spring neighborhood economies opened Westchester, the and opened pretty rapidly. and Island the have up Long seen We've retail have up elsewhere. outer

to So York open on up, need the good in most there. New destination area we'll we be open that's and focused up. think We retail. shape really is need that I to But we're Manhattan

Steven Alexopoulos

be would $X.X Yes, assume in billion. which the mixed-use, would I

are portfolio? So Eric, the specific in that now what reserves

Eric Howell

Steve, second here, me sorry. one Give

basis CRE, our on another So the X.XX% loans X% we in points on on with have XX and our reserves multifamily. ADC

Steven Alexopoulos

Okay.

The have part the you that you're chance don't have retail. by most about, You don't concerned do you?

Eric Howell

I don't have and retail the office. it but broken of CRE, that's out

Operator

is Vandervliet UBS. Your next with question from Brocker

Brocker Vandervliet

separate the some of news may and credit When about it comfort? Just fundamentals the stories, than makes overhang, about we how get positive Estate from which try outlook to about good to is fundamental. hard York think you more been from of York and what of be has that one services. the wire you severe New to also give And is seems the macro from various on And very endless and York you results this like more on Real think more make these your news you most pretty stream points just confident a of which it's that situation kind some portfolio, potentially other stuff investors asked. variant since questions of thematic New New It day guys. negative of and

Joseph DePaolo

and people XXth wrong good B-type in not the we're -- situation. it Avenues. We're said Avenue. couldn't that. something Well, that, they terribly But X writing on not they They're We're are story attracted having if wouldn't on say street. Madison not not any Street because wasn't the the if stories with write the the to buildings on

of whether neighborhood Bronx And -- we're having confident very in retail, also most some that Road clients and on it's the in how have, in And some in destination the the Fordham the -- have or in is. city the about places Northern we're Avenue confident of Westchester Boulevard Bronx the is retail, we worked are where retail. lived We it's themselves. the or retail those Queens, robust but it

important. the their always because our real well the And And had step it's York a jockey believe they're bet on clients estate timing timing say, experienced When issue, on the and that's in colleagues a a come multimillionaire, we that to New used of We horse. what's issue. will sentence think on think gives we've it's of of going one not these multigenerational, of clients don't say former comfort. back. handlers us we've if We here. lot death say, I up can jockey, businesses, bet some keep on. I I

I'm a at a change to be in and of right administration better in now the mayor in cooperated very be Governor sitting Bank the if looking think situation. for there with We're I we'd City. each York that much institution New Signature in other, forward this

are of but are is that the we know of that I outweigh these there -- negatives, the positives that's the have. the we one And I number So us believe that of type drives positives. the things negatives. think fact clients a the

Operator

question from McGratty with comes next Chris KBW. Your

Chris McGratty

the Eric, I want to heard make comment. sure I expense

And digits." depending still I year-on-year, the pace low the of You calls, number repeat prior I this of "Hey, charge excluding glide talked down QX? you've think, about, investment. on I said, you that's think just if expectations for the case to just on double is that to to XX.X% quarter. going then Could see kind want

Eric Howell

Yes. to prepaying Well, did, for expense the about borrowings. the in be growth potential fourth expected but have would quarter see I XX%, we we'd again, talk that around some

up that back to XX% might range. pop So that XX%,

be on we but lot We're XX%. So we're them sure to ex But around a to which we prepayment there's still. the West alluded the capture, earlier, opportunities out Coast not there. have Joe going as borrowings, of should significant opportunities

So pop back the tell, but we up too could to see Chris. first expenses in little early it's quarter, a

Chris McGratty

Okay.

we the one. tax differently Anything be the the XX income you that a the strategies opposite have if stimulus tax proposed get know with math last election with And increases? the little guys being I tax with fee with a lot Okay. of from after increases. wouldn't and magnitude your line. bit around the tax time into structurally similar this Obviously, there's noise similar

Joseph DePaolo

Yes. taxes is our up, in go administration, to clearly. banks change a We taxes, that if are believe going there

Chris McGratty

taxes got same proposed if the I -- benefit is though But the XX, in sensitivity, mean, going cut. is the what's I -- the when receive guys XX% to you think, is proportional terms as being after from math of math XX%, the

Eric Howell

should quarter there's of It taxes I moving this of be. in similar. lot we should calculating lot file had It actuals, our we Chris. a a be when should It mean be, pieces that. September. actual In

true that had differences tax we the So to up. we had accrual

in -- that and be should rate at tax tax code, XX% forward. sorry, So ex rates tax any administration change moving XX%, in change we the and

Joseph DePaolo

says pretty that we're they're the confident, inauguration. January, new day the administration And it after filing in

Operator

comes Jared next question Your with Wells Fargo. from Shaw

Jared Shaw

on the call high different we just loans, level. for the capital credit Maybe comfort sounds is for maybe Is of future that just that reserved you a a watermark percentage look from the like expect credit. coming good at the a worst and that way quarter the business growth given the It then this as of asking should ACL to it?

Eric Howell

any change, For to macroeconomic it. that's fair at a look way

Jared Shaw

you little $X Joe, tied then all? And Or Can you is color had on mentioned billion digital growth. that? at And that a all Great. there? give Signet of any Okay. update in deposit to at

Joseph DePaolo

made of to because some enhancements and Signet it's of part, in say, would we've I Yes. the Signet.

starting to that of stay result, were business, the deposit to now on the were is that's We world. we in we're we're business. And say a business dollars, drive quite couple the The and that. board see banks some we and do OCC now. good of stablecoins bringing that talking going to They the capabilities. some clients ago. the as about probably growth in we're the digital were doing And just hesitant And in of have years holding a to the wanted support a going let's

Operator

with next Keith question Your from Christopher is Davidson. D.A.

Christopher Keith

at loans average was on yield X.XX%. So loans. just I The was looking the commercial

set maybe on in then 'XX? of me amount the reprice loans XQ 'XX and over of loans Can that multifamily multi-family sense maybe putting of to you You're give and a at course are X.XX%. CRE the just

Eric Howell

Yes.

$X approximately that's have quarter, billion We per repricing.

Christopher Keith

just XXXX. a guess, then bit a by on mortgage assumption? just, the your I modestly you curve that the on to And getting talk and range Okay. residential assuming with both XX point commercial maybe Can then impact yields basis steepening

Eric Howell

that We'll that all. a our commercial lender X.XX%, range. mortgage at not I We're in change mid- still meaningfully think yields. don't resi will be X.XX%

there's So there. no nothing --

Operator

teleconference. today's our concludes allotted for time This

found of call listen If also you'd please at to refer dial A have a lines and time, ID conference a to www.signatureny.com. like to today's webcast XXX-XXX-XXXX this archive at this wonderful your can and disconnect Please day. conference, replay of be XXXXXXX.

Signature Bank (SBNY) 20 Oct 202020 Q3 Earnings call transcript